Target Crushes 3Q Estimates As Online Sales Rocket 155%; Shares Rise

Shares of Target Corp. rose 2.6% after the retailer crushed 3Q estimates driven by robust online sales and same-day delivery services. The company’s 3Q earnings of $2.79 surged 105.1% from the year-ago quarter and paced past analysts’ estimates of $1.60. Its revenues of $22.3 billion grew 21.3% and topped the Street consensus of $20.9 billion.

Target’s (TGT) comparable sales (comps) grew 20.7%, driven by a 4.5% increase in traffic and 15.6% growth in average ticket. The company’s store comps grew 9.9%, while digital comps surged 155%. The company said that “more than 95 percent of Target’s third quarter sales were fulfilled by its stores.” Target’s same-day delivery services jumped 217% year-over-year.

During the quarter, Target reinstalled its share repurchase program, which was suspended on March 25 due to the COVID-19 pandemic. The company is likely to resume share repurchases in 2021. At the end of 3Q, Target had approximately $4.5 billion of remaining capacity under its share repurchase program. (See TGT stock analysis on TipRanks)

In reaction to the earnings release, Robert W. Baird analyst Peter Benedict maintained a Buy rating on the stock and a price target of $175 (7.34% upside potential) calling the results a “blowout quarter”. The analyst said that 3Q upbeat earnings were driven by strong comps , gross margin, and operating leverage. He believes that the company is effectively leveraging its physical store footprint and fulfillment options to drive market share gains across all categories.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 14 Buys, 4 Holds and 1 Sell. The average price target stands at $170.29 and implies upside potential of about 4.5% to current levels. Shares have increased by 30.8% year-to-date.

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